Heterogeneity matters: temporary employment, productivity and wages in Italian firms

Abstract

This study analyses the relationship between flexible employment, productivity and wages, along their distributions. We use an original firm-level dataset, which combines information on workplace characteristics from Rilevazione su Imprese e Lavoro (RIL) with the Analisi Informatizzata delle Aziende Italiane (AIDA) balance sheet information for the universe of Italian non-agriculture/financial corporations. We employ different quantile regression models to panel data and find, first, that use of temporary contracts is associated to a reduction in labour productivity and wages at each point in the corresponding distribution; and second, that the negative relationship between labour productivity and wages decreases in magnitude along the quantiles of the productivity and wage distributions, suggesting that low-productive/ low-wage firms use temporary employment to permanently staff positions and to compress labour costs.

Identifying Factors Influencing the Labor Productivity of SMEs in South Sumatra

“…These findings indicate that labor domiciles in local region have a higher ability to influence labor productivity than workers who are domiciled from outside the region. These findings are in line with and support the results of a study conducted by Cirillo & Ricci (2020); Ramadhan and Setiadi (2019) and Panshin et al (2019).…”

Firm strategies and distributional dynamics: labour share in Italian medium-large firms

“…The only exception is among the more productive firms where temporary employment is not associated with wage compression. Empirical literature supports this evidence on heterogeneous usages of temporary employment among high-productive and lowproductive firms (Cirillo and Ricci 2020). High-productive firms resort to temporary contracts as "screening device" for more productive workers and tend to convert temporary employment in permanent positions.…”

“…Conversely, as clearly stated in OECD (2015), when the growth in average wages lags the growth in labour productivity, the labour share declines. Against this background, the Italian productive structure is characterized by high dispersion of productivity and wages, namely high-productive and low-productive firms coexist and pay to workers different wages (see Bugamelli et al 2018;Cirillo and Ricci 2020). Dispersion in productivity is a well-known empirical fact (Syverson 2011) as well as high dispersion in wages (Barth et al 2016).…”

Non-standard work and innovation: evidence from European industries

“…Finally, wage flexibility typically refers to a downward adjustment of wages and is closely related to numerical flexibility (Arvanitis 2005;Kleinknecht et al 2006). Numerical and functional flexibility as employment strategies can clearly coexist (Atkinson 1984), albeit with heterogeneous effects on firms' performance (Cirillo and Ricci 2020;Kalleberg 2001;Michie and Sheehan 2003). In particular, if there is a broad agreement that functional flexibility enhances production efficiency, there is much less consensus on the impact of numerical flexibility on the pace of product and process innovation.…”

“…Along this line, several empirical analyses have been carried out with the aim of empirically investigate the relationship between the deregulation of labour market and technological progress (Cirillo and Ricci 2020;Hoxha and Kleinknecht 2020;Sheehan 1999, 2003;Vergeer and Kleinknecht 2010). Among industry-level studies, the work by Cetrulo et al (2019) is worth mentioning.…”